Aha, it's AHA weekend. No mickey mousing around down there in FLA, time for some big drugs to put up some big data. Or something. Hope you had a nice weekened.While you were refusing to run the football (looking at you Andy Reid...) ...
- AHA: The big weekend news was more bad news for Merck's Zetia/Vytorin franchise, as Abbott's Niaspan wins the weekend. Forbes' take here, Reuters here.
- AHA: Brilinta beats Plavix in reducing further serious cardiac events post heart attack. An analysis of the toughest patients in the massive PLATO study adds to Brilinta's advantage, reports Reuters.
- AHA: The Medicines Co says cangrelor is not dead yet. A full analysis of the Phase III CHAMPION study (which did not hit its clinical endpoints) suggests "cangrelor significantly reduced the composite endpoint of death, Q-wave myocardial infarction (MI) and IDR," says a release.
- NYT: Drug prices keep going up! You don't say ...
- BMS: Mead Johnson shares have risen nearly 90% since Bristol-Myers Squibb Co. IPO'd its nutritionals business earlier this year, and now BMS is using that boost to finance a share buy back. That February 2009 IPO let BMS focus on its core biopharma business while consolidating MJ's top and bottom line--a nice stabilizer for the company. But this weekend BMS said it would spin off the company (reports Bloomberg), exchanging Mead shares for tendered BMS shares--and boosting EPS in the process. More on this later!
- POC: Addex Pharma's lead allosteric modulator ADX10059 passes a big test, hitting all primary and secondary endpoints in a Phase IIb monotherapy trial in GERD patients. A second trial, as add-on to PPI therapy, will read out in January. Next step, partnership?
- WTF: At least it was bipartisan. The NYT reports that Genentech lobbyists ghost-wrote health care reform related statements and speeches for 22 republican and 20 democratic Congressmen.
Mark Twain once mused: there are lies, damned lies and statistics. Unfortunately, today’s New York Times only tells half a story, using selected statistics to make a flawed assumption that an increase in drug prices must somehow be tied to health care reform.
ReplyDeleteIn truth, price increases are the natural result of market forces. All companies make their own independent pricing decisions based on many factors, including patent expirations, the economy, and the huge, sunk R&D costs which typically exceed $1 billion for a single medicine.
But here is a key part of the story that the Times ignored: this has not been an especially good year for drug companies. According to Forbes magazine, 58,000 jobs have been lost so far in 2009 because of the economy and sluggish sales, due – in large part – to a rapid increase in the use of generics. What’s more, financial results for a dozen of our companies show zero revenue growth in the third quarter and -3% year to date. And, one of the same studies cited by the Times forecasts only a 2% revenue growth over the next five years. Of course, that wasn’t reported. It’s those tricky statistics again.
So, focusing only on prices, as the Times did, can present a misleading picture of our sector. In some ways, it’s like trying to project annual U.S. auto sales by adding up sticker prices. That’s not reality. How many people in America actually pay full price for a car?
Similarly, drug manufacturers often offer steep discounts and rebates through negotiations with large payers such as insurance companies. In fact, government reports show that rebates in the Medicare prescription drug program average 20-30% for many brand name drugs and those rebates have actually increased in recent years.
Simply put, discounts and rebates can significantly lower the cost of many brand-name drugs, benefiting patients nationwide. But you wouldn’t know it by looking at pharmacy prices – or reading the New York Times.
Here is another important fact lost in the story. Every single one of the pricing reports cited by the Times relies solely on pharmacy transaction data, which do not capture off-invoice rebates. In other words, the Times is trying to do the political calculus by adding up sticker prices again.
It’s wrong and it’s misleading. Today, prescription medicines account for 10% of health care spending in America – the same as it was back in 1960.
Finally, if our industry was doing so great, then why isn’t it reflected in pharmaceutical stock prices which remain depressed? Since the beginning of 2004, the AMEX pharmaceutical index has declined 16.1% while the Dow has decreased 7.2% and the S&P has dropped 5.8%. If health care reform, which we strongly support, had the potential to be a windfall for our industry, street analysts would be shouting “buy.” That’s simply not happening. Why? Well, according to IMS – in yet another study cited by the Times (but a key finding also ignored) – “market growth is expected to remain at historically low levels” through 2013.
As we enter the homestretch of the health care debate, there are going to be a lot of last-minute political attacks designed to sabotage reform. We believe smart, common-sense Americans will be able to differentiate between the lies, damn lies and statistics.
Ken Johnson
Senior Vice President
Pharmaceutical Research and Manufacturers of America
Washington, D.C.
Andy Reid would not be the Eagles' best choice to run the ball.
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